There are two principal forms of title insurance:
1. The lender's policy
2. The homeowner's policy
What is a lender's policy?
A lender's policy protects the mortgage holder. If there is a fault in title
that results in a loss, the mortgage holder will be paid back.
What is a homeowner's policy?
A homeowner's policy protects you, the purchaser, against a loss that may occur
from a fault in your ownership or interest you have in the property. You should
protect the equity in your new home with a title policy.
What does a homeowner's policy provide?
Protection from financial loss due to demands that may be charged against the
title to your home, up to the cost of the title policy. Payment of legal costs
if the title insurer has to defend your title against a covered claim. Payment
of successful claims against the title to your home covered by the policy, up to
the cost of the policy.
What "hidden risks" are protected under a title policy?
False impersonation of the true owner of the property by the seller or
other persons previously in title
Forged deeds, releases and other documents
Deeds by persons of unsound mind
Deeds by minors
Invalid documents completed by an expired attorney
Invalid deeds delivered after the death of the grantor
Deeds by supposedly single persons but actually married
Claims for unpaid estate inheritance and gift taxes against prior owners
of your home
Unrecorded easements - giving one party the right to enter another party's
Undisclosed descendents of former owners of your home or the land on which
it is situated